Ahmedabad: In the industrial hub of Gujarat’s Sanand, every time entrepreneurs — even those driving small or medium-sized industries — meet, they make it a point to wear freshly ironed modish suits and book conference rooms in hotels.
“At Sanand, we have decided that everything we do has to be in a corporate style. It’s all about creating a feel and getting out of a culture,” said Ajit Shah, president of Sanand Industries Association, while speaking to ThePrint.
This, in a nutshell, is what Shah thinks that Vibrant Gujarat, the biennial global investment summit initiated by the Narendra Modi-led Gujarat government in 2003, has done for the state’s industries.
It has given them a vision, shown them the world outside, and pushed them to strive more, he believes.
“Warna hum toh kue ki mendak the (otherwise we were complacent with a narrow outlook, like the frog in a well),” Shah added.
Last month, the Gujarat government celebrated 20 years of Vibrant Gujarat, with Prime Minister Modi crediting the investment summit for helping the state take a turn after a bout of political instability, destruction by a cyclone, a massive earthquake, and communal violence.
“There was a conspiracy to defame Gujarat on the world stage. There was an atmosphere of depression. It was said that Gujarat can never stand on its feet… Vibrant Gujarat was organised at a time when the then Union government used to give Gujarat’s government second-rate treatment. Foreign investors were dissuaded from going to the state,” Modi said at an event in Ahmedabad to mark 20 years of Vibrant Gujarat.
Industrialists and retired officials who have seen Gujarat’s industrial growth curve say efforts to improve the state’s competitiveness in grabbing investments vis à vis other states had started a long time ago. Vibrant Gujarat only took these efforts forward by institutionalising them at a time when other states were yet to do so, giving the state a sharp advantage.
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Early years of industries in Gujarat
Political parties in Maharashtra have cried foul when chief ministers of Gujarat such as Anandiben Patel, Vijay Rupani and now Bhupendra Patel held roadshows in Mumbai to promote the Vibrant Gujarat summit.
But, Gujarat has often looked at Mumbai and Maharashtra while charting its roadmap to industrialisation, right from its early years.
When Gujarat was carved out from the erstwhile Bombay state in 1960, it had lost the region’s economic nerve centre, the city of Greater Bombay, to the newly-formed Maharashtra. The state spent most of the first decade of its existence setting up an industries framework.
The first chief minister of Gujarat, Dr Jivraj Mehta, created an infrastructural framework for industries by setting up the Gujarat Industrial Development Corporation (GIDC) in 1962. It was also under his leadership that the Gujarat government set up the country’s first joint sector company, Gujarat State Fertilisers & Chemicals Limited, securing direct equity participation of farmers.
In 1967-68, the state government set its sights on Vapi to develop its first major industrial cluster. Vapi, located in Valsad district on the border with Maharashtra, was a convenient pick because of its proximity to Mumbai.
The distance between Vapi and Mumbai is about 168 kilometres. Vapi developed in phases as a textile, chemicals and dyes, packaging and a pharmaceutical hub, and is now spread across 1,600 hectares.
“Bombay (now Mumbai) was getting congested, so the idea was to start an estate near the city, near Vapi at the border so that people could commute easily. And today, Vapi is one of the largest industrial estates in Asia. Initially, there were hardly 23 units there in the 1970s. They were all taking toddler steps at the time,” P.K. Laheri, a retired IAS officer, told ThePrint.
Shah of the Sanand Industries Association was among the industrialists to set up a packaging company at Vapi in the early 1980s, with proximity to then Bombay being his primary criterion. Vapi drew in a few Mumbai-based entrepreneurs as well.
“In the initial years, there were many small industries, and many entrepreneurs came from Mumbai. There was a GIDC employee who was like a relationship manager, who would hold meetings with companies in Mumbai to get business to Vapi,” Satish Patel, president of the Vapi Industries Association, told ThePrint, adding that Vapi now has 3,500 industrial units and is fully saturated.
Through the 1970s and 1980s, industrial centres blossomed in the Saurashtra region, mainly Rajkot, Bharuch, Surat and so on.
Laheri, who worked in the Gujarat industries department in various positions, said that through the 1970s and 1980s, Gujarat gradually started rising in the country’s rankings for industrial output.
In 1978, the Gujarat government also set up the ‘Industrial Extension Bureau’, known as iNDEXTb, as a single point of contact for industries, Laheri said.
“In the 1980s, Congress CM Madhavsinh Solanki thought industrialisation should be expedited. By then there was active competition, mainly between Maharashtra, Gujarat and Karnataka. We kept on offering incentives, copying each other. I was then in the industries department. Practically, every six months, we would be in Maharashtra. We would get the Maharashtra government resolutions and sometimes implement them verbatim,” he added.
“There was no sensitivity to copyrights back then,” he joked.
In 1960, when Gujarat was formed, the state had 3,649 factories and 3.29 lakh workers employed there, according to the state’s social and economic survey report for 2021-22. In six decades since then, these numbers rose to 36,726 factories with 18.97 lakh workers in 2020.
According to data from the Gujarat Industries Commissionerate, the state’s industrial output was Rs 84,808 crore in 1994-05. By 2014-2015, it had increased almost 15 times to Rs 12.70 lakh crore.
However, there are parts of Gujarat that are still relatively untouched by these data points.
Industry voices say that it’s not entire districts, but some talukas within those, particularly those that are far-flung or tribal, that are still laggards.
Gujarat also lagged behind Maharashtra in drawing foreign investment. But over the years, the state has played catch-up with a relatively stable political environment. On the other hand, Maharashtra’s political instability since 2019, along with a certain degree of complacency, has not helped.
In the 1990s, Gujarat had a taste of what Maharashtra has been facing since 2019.
The decade saw Gujarat change its chief minister six times, and the instability hindered the state from fully taking advantage of post-1991 liberalisation in India, industry insiders from Gujarat say. The state also had an acute water shortage problem.
It was in this backdrop that Modi took over as Gujarat CM in 2001, after the incumbent CM, the Bharatiya Janata Party’s (BJP) Keshubhai Patel, resigned from the position due to poor health.
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‘50 calls a day’ — how Vibrant Gujarat took shape
In the 1990s, all states competing for a share of India’s industrial growth had started holding roadshows, meeting entrepreneurs from different states, and giving presentations.
Industrialists say Gujarat had even developed a physical atlas of its industrial clusters with every plot marked accurately and in detail. Vibrant Gujarat took these efforts to the next level, long before other states did.
In 2003, Modi appointed Laheri as the chief secretary (CS) and it was under this CM-CS pair that the first edition of Vibrant Gujarat was organised in Ahmedabad’s Tagore Hall, with a capacity of about 700 people.
The state reportedly signed investment intentions worth about Rs 66,000 crore in the first summit, and ‘MoU’ (Memorandum of Understanding) became the new buzzword.
Laheri recalled how Modi was personally invested in making the event a success, right from being involved in naming the investment summit to giving out personal invitations to industrialists.
Many options were discussed with him — ‘Invest in Gujarat’, a plain and staid ‘Investors’ Summit’, an alliterative ‘Gujarat is Gold’, and even the run-of-the mill ‘Dynamic Gujarat’. Modi picked ‘Vibrant Gujarat’, Laheri said.
“Modi asked ‘kitne log avenge (how many people will come)?’ In industries, you don’t have that answer. He said ‘who all have been invited? Give me the details’,” Laheri said.
“Every morning, he (Modi) started calling 50-60 people on the list, so then those people naturally confirmed their participation. People were calling me and asking, ‘Laheri sahab, kya ho raha hain, sub sub aapke CM ne phone kiya (Laheri sir, what is happening? Your CM called us early in the morning)’. They generally expect that it must be related to political funding or something,” he added.
The Congress in Gujarat, however, believes its contribution towards the growth of industries in the state is often disregarded in the public discourse centred around Vibrant Gujarat.
“Vibrant Gujarat is all hype. The Congress government had also brought big conglomerates to Gujarat in the 1980s. The aim of industrialisation is to reduce unemployment, which has been at around 2.2 per cent,” Hiren Banker, a spokesperson of the Gujarat Congress, told ThePrint.
“We have often demanded a white paper on how many of the touted investments signed at Vibrant Gujarat have actually materialised. If the state has really benefited so much, why are they scared to state the facts in a white paper,” he asked.
Gujarat’s industries — from Sanand to Kutch
Now, many states — Maharashtra, Uttar Pradesh, West Bengal, Assam and Karnataka, among others — hold investment summits like Vibrant Gujarat, which enjoys the title of being a pioneer.
Yogesh Parikh, former vice-president of the Gujarat Chamber of Commerce and Industries (GCCI), says his business has greatly benefitted from the networking that happens at the Vibrant Gujarat summits with global entrepreneurs and investors.
Parikh is proprietor of Avani Dye Chem Industries, a company that manufactures and exports dyes.
“We have started exporting to countries where we weren’t before. Our material used to first go to Turkey, and then from there to other countries such as Uzbekistan, Kazakhstan, Russia, Kenya, Nigeria. Today, we deal with many of these companies directly,” he told ThePrint.
Parikh said his company’s exports have doubled in the past five years. Avani Dye Chem Industries has its plant at Vatva, near Ahmedabad.
Members of GCCI told ThePrint that the industries outfit collaborates with the state government in organising various aspects of Vibrant Gujarat, meeting and hosting delegates. Representatives from member companies have also gone with the Gujarat government to other countries to invite investors for the Vibrant Gujarat summits.
“All this helps our member companies grow their individual businesses too,” said Parikh.
Sanand has been among the biggest beneficiaries of the Gujarat government’s aggressive posturing for industries through these summits.
The area, about 22 kilometres from Ahmedabad, was predominantly agricultural. But things changed after the then Modi government in Gujarat rolled out the red carpet for Tata Motors in 2008 to manufacture its affordable car, the Nano.
Today, said Sanand Industries Association president Shah, Sanand has 550 industries with plot sizes as small as 250 square metres to as large as 4 lakh square metres, ranging from pharmaceuticals and plastic engineering to food and automobiles, among others.
Thirty-six of these are multinational corporations, he added.
Satish Patel from the Vapi association likes to talk about how some of the country’s large, well-known companies started out with a small unit at Vapi.
“Look at United Phosphorus Limited, Aarti Industries, Welspun India, Alok Industries. They all had their beginnings in Vapi and subsequent Vibrant Gujarat summits gave them global business,” he said.
B.K. Goenka, chairman of Welspun Group, speaking at the event to celebrate 20 years of Vibrant Gujarat, said that Modi had advised him to expand to the earthquake-stricken Kutch region in the very first Vibrant Gujarat summit.
He said the then CM’s advice proved to be “historic” and, with all the state support, his company could start production in a record time.
According to Rashmikant Mehta, president of the GIDC association of Gandhidham in the Kutch region, both the central and state governments gave all sorts of incentives to get Kutch back on its feet after a major cyclone in 1998 and an earthquake in 2001.
“Modi had made it his dream project to build Kutch again. The government technically made it a single-window system to clear all roadblocks that industries may be facing even back then. Power and oil industries came. Smaller industries developed to support the larger names,” Mehta, who runs a plastics packaging industry, told ThePrint.
Mehta, too, had lost everything in the earthquake and rebuilt his fortunes with the help of government aid.
But, he believes, it had less to do with Vibrant Gujarat and more to do with the fact that Kutch borders Pakistan.
“It was always in the government’s interest — both Centre and state — that Kutch was not left shattered and vulnerable,” he said.
According to Mehta, Vibrant Gujarat is more about talk than action.
“Two thousand people will come and less than 200 of those investment intentions will materialise,” he said.
Ajit Shah, however, has a different opinion.
He has launched a new company, Vibrant Industrial Park, to set up well-planned plug-and-play private industrial clusters. He gets a call or an email from a team “reporting directly to the Gujarat Chief Minister’s Office” almost every week to follow up on the status of the project, and ask if there are any roadblocks.
“Sometimes, it is the fear of their follow-up call that makes us take swift decisions,” he told ThePrint.
(Edited by Nida Fatima Siddiqui)
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